WITH OUR FINANCIAL SYSTEM in disarray, I was surprised to learn that my credit union, Coastway Credit Union, has proposed converting from a member-owned nonprofit into a bank. After all, credit unions have been a bright spot in these difficult times, providing loans in a responsible manner and avoiding the kinds of risky, greed-driven lending that fed the crisis.

Coastway has a long history as a Rhode Island member-owned co-op. It’s the fourth oldest continuously operating credit union in America, founded in 1920 as the Telephone Workers’ Credit Union. Over the years it has carefully grown to more than $25 million in member-owned equity and $284 million in assets. Today, one in 40 Rhode Islanders is a member.

So, as an inquiring credit-union member, I have serious questions about this conversion attempt. What is motivating Coastway’s leadership to turn a nonprofit, member-owned cooperative into a bank? How can Coastway give up its nonprofit tax exemption without charging customers higher rates and fees? And what will happen to the $25 million owned by Coastway’s members?

These are the sorts of concerns that have led national organizations such as the Consumer Federation of America and the National Cooperative Business Association to oppose proposed credit-union conversions such as Coastway’s.

I recently received information from Coastway’s leadership asserting that becoming a bank will better serve members. I doubt this, and here’s why:

First, credit unions that have converted to banks now charge higher rates on loans and offer lower-paying deposits. This has been clearly documented (check for yourself at www.ncua.gov/BankRateData/index.htm).

Second, if you are a member of Coastway, your ownership share of the $25 million of member-equity is at risk if your credit union becomes a bank. While Coastway’s leadership tries to assure members that it has no plans to sell stock while converting, their literature leaves plenty of wiggle room, stating that the new bank could sell stock “in the event it is necessary to raise capital in the future.”

In fact, 75 percent of credit unions that have converted have eventually sold stock. And all too often the very executives and directors who advocated conversion to a bank end up with a disproportionate share of that stock. At a minimum, this possibility of undue enrichment is a conflict of interest between the opportunity for personal gain and the responsibility to serve the members’ best interests.

To this point, I Googled Georgeson Inc., the company on the return address on my conversion letter from Coastway. Georgeson describes itself as “the world’s foremost provider of strategic shareholder consulting services to corporations and shareholder groups working to influence corporate strategy.”

Why is Coastway using member-owned resources to hire a firm specializing in “strategic shareholder consulting” if they do not intend to become stock-owned?

Coastway members have the opportunity to reject the proposed bank conversion. When they receive ballots in the mail at the end of this month they can vote to keep their credit union or turn it into bank. If a majority of voters cast their ballot against this proposal, we can save our credit union and the value it provides to our entire community.

At the same time, we need to reform U.S. conversion law to make it fair to rank-and-file members. The easiest solution is to require a majority of all members to vote for a conversion, as opposed to current law which requires only a majority of voting members to approve. This was the standard before 1998 and this “majority-rules” standard is commonly used by federal regulators for other types of conversions.

Rhode Island’s congressional delegation should take the lead in restoring this standard.

Coastway’s CEO explains that the credit union needs to convert to increase its business lending. But Coastway can continue to make business loans as a credit union through the common practice of letting other credit unions participate in the loans. Furthermore, Sen. Charles Schumer (D.-N.Y.) has announced that he will introduce legislation to raise the limit on credit-union business loans.

So the conversion reasoning doesn’t seem to add up. Coastway members have a good thing going. Founded almost 90 years ago by working people, Coastway has built its $25 million in net worth by prudently investing in its members to serve them better. Coastway members must now be vigilant to ensure that our institution continues to provide Rhode Islanders with fair and affordable financial services that support our local economy. Please visit www.savemycreditunion.coop for more information on what you can do to protect our good rates and member ownership.

Erbin Crowell, of Glocester, is a Coastway Credit Union member and a member of the board of the National Cooperative Business Association.